Energy Prices Drive Inflation in Japan, Panasonic to Sell Healthcare Unit

Hiruki Nakamura
27 Sep, 2013
New York City

Market indexes in Tokyo closed lower and the latest data on inflation showed a slight uptick on higher energy prices. Panasonic Corp is close to selling at least 75% of its healthcare unit to KKR for $1.5 billion.

[R]4:45 PM Tokyo – Market indexes in Tokyo closed lower and the latest data on inflation showed a slight uptick on higher energy prices. Panasonic Corp is close to selling at least 75% of its healthcare unit to KKR for $1.5 billion.[/R]

In Tokyo trading, Nikkei declined 0.26% to 14,760.07 and for the week the index was nearly flat.

In Asian markets, the indexes in Hong Kong and Shanghai advanced 0.4% and in Mumbai the benchmark index fell 0.8% after the Reserve Bank of India changed its reference inflation index to consumer price index. The move is likely to lead to additional increase in interest rates in the near future.

The yen advanced 0.6% to 98.45 against one dollar and gained 0.2% to 133.30 against one euro after Finance Minister Taro Aso said government would need additional revenues sources if corporate tax rate was lowered.

The comments dampened the hopes that the government stimulus plan may offer corporate tax relief.

Energy Prices Drive August Inflation Data

Consumer prices in Japan rose at the fastest pace since 2008 in August, according to the latest data released by the government.

Consumer price index excluding fresh food increased 0.8% from a year ago month in August, the statistics bureau said today. Prices excluding food and energy declined 0.1%.

The 20% slide in yen against the dollar helped to push up the cost of energy and other commodities and the government and the central bank are working in tandem to revive inflation.

Prime Minister Shinzo Abe is also expected to pass through an increase in sales tax to 8% and demand wage increase from corporations. The government is set to announce measures on October 1. The sales tax was last increased in 1997.

Media reports suggest that the government is likely to announce 500 billion yen or $5 billion in tax breaks for capital spending and 1.4 trillion yen in corporate tax cuts to offset the planned increase in sales tax.

While gasoline prices in the month rose to the most since 2008 wages and salaries in July extended the decline since 2010. Wages excluding overtime and bonuses declined 0.4% in the month, 14th monthly decline in a row.

Panasonic in $1.5 Billion Deal

Panasonic Corp is in advanced talks to sell its health care unit to a U.S. based private equity group
KKR & Co. for about 150 billion yen or $1.5 billion.

According to sources in New York and in Tokyo the company is planning to keep at least 15% stake in the healthcare unit and sell the rest to raise capital to bolster its struggling cash position.

Stocks in Review

Tokyo Electric Power Co soared 6.6% to 597 yen after the company won a regulatory approval for its nuclear plant Kashiwazaki Kariwa facility. The plant is the largest single nuclear power plant in the world.

Sumitomo Mitsui Financial Group, Inc decreased 1.3% to 4,880 yen and Mitsubishi UFJ Financial declined 1.4% to 644 yen.

Daiwa Securities declined 0.5% to 911 yen and Nomura Holdings added 0.1% to 791 yen.

Sony Corp increased 0.2% to 2,106 yen and Panasonic Corp gained 0.2% to 962 yen. Canon Inc eased 0.1% to 3,170 yen and Pioneer Corp added 0.6% to 166 yen.

Toyota Motor Corp declined 1.1% to 6,440 yen and Honda Motor Corp fell 0.8% to 3,840 yen and Nissan Motor fell 1% to 1,006 yen.